Advice for a first time landlord...
Buying the buy to let
Buying a property to let is different to buying a new home. When you buy a home the decision involves both your heart and your head; you choose a property that you love, and that meets your specific needs. When buying a property to let, your heart needs to be left at home, as this is a business transaction and you need to buy a property that will make a profit for you.
At Bidmead Cook we can advise you on high performing and up and coming areas that tenants are looking for properties within. These can often be close to towns with good transport links that provide an easy commute to work. Depending on the location, we will be able to advise you on the type of property you should be looking to purchase; in some areas this could be a terraced house, in others an apartment.
Buying to let is about understanding your target client and buying and presenting a property that will meet their requirements. Professionals will be seeking a property in excellent condition with a high standard of finishes and fittings. Families will want space, storage and décor that is easy to maintain.
Our lettings team are always available to give you the advice you need to ensure you make the right purchase for your first buy-to-let.
Getting the figures right
You will obviously be looking to generate an income from the rental of your property, therefore you need to calculate the yield to ensure that the return makes good business sense.
To calculate the yield, you divide the annual rent by the price you paid for your property. For example, if your property cost £90,000 and your annual rental income is £9,000, you will be achieving a gross yield of 10%. (9,000 ÷ 90,000) x 100 = 10% Yield
Remember, this is your gross yield, and you need to take into account your expenses, such as letting agent fees, and the cost of any repairs and maintenance that are needed at your property. These costs can vary greatly, depending on the amount of work required to get your property ready for a tenant. These costs will reduce your rental income, and give you your net yield.
It is worth estimating the yields you might achieve on properties you are looking to invest in, to see which would give you the best return. Always be sceptical when it comes to calculating the costs, hopefully this will cover anything you hadn’t anticipated.
Understanding your legal responsibilities
There are many rules and legal regulations that apply when becoming a landlord. In Wales, you are required by law to register with Rent Smart Wales; you can then either contract a letting agent, such as Bidmead Cook, to manage your property on your behalf, or you can take the exam, and if you pass you will be able to manage the property yourself. The exam ensures that you fully understand your responsibilities as a landlord, the law with regard to managing a property, and also how to manage a property successfully.
As part of these responsibilities you are also required to provide your tenants with a number of certificates before they move into your property, such as an Energy Performance Certificate (EPC) and Gas Safety Certificate. Although it is not essential, it is also good practice to present them with a copy of the Electrical Safety Certificate.
If you would like more advice on becoming a landlord for the first time, contact your local branch and speak to a member of our lettings department.